Assistant Secretary of Commerce Michael C. CamuÑez
Market Access and Compliance
U.S.-East Africa Public/Private Partnership Conference
Thursday, May 17, 2012
As prepared for delivery.
Good afternoon ladies and gentlemen. It’s such a pleasure to be with you today during my first visit to Nairobi. I’m truly honored to be representing the Obama Administration and the U.S. Department of Commerce at such a distinguished gathering.
Thank you Camille for both that kind introduction and for all of the great work you and your incredible staff do on behalf of American industry at our Embassy in Nairobi. As many of you know, as our Senior Commercial Officer Camille and her team are an important voice and tireless advocate for the American business community here in Kenya.
Friends, we have gathered today to consider how, together, we can foster more robust public-private partnerships here in Kenya and in the region. And I am thrilled that so many of the key stakeholders who make these types of partnerships possible are here with us today. I want to acknowledge our key private sector partners, including Japh Olende from the American Chamber of Commerce in Nairobi; Steve Hayes from the Corporate Council on Africa, who is here with us from Washington; the representatives of the Kenyan Private Sector Federation and the Kenyan Association of Manufactures; and all of the other individual American, Kenyan and East African companies that have taken time out of their schedules to participate today.
I’d also like to recognize our representatives from the U.S. Treasury Department, the Overseas Private Investment Corporation, the U.S. Trade and Development Agency, the African Development Bank, the World Bank and the International Finance Corporation.
Seizing Momentum: East Africa’s Opportunity for Growth and Development
In my role as Assistant Secretary of Commerce in the International Trade Administration, I have the privilege and responsibility for traveling the globe and working with our international trading partners to deepen our commercial relationships and strategic trade worldwide.
Through my role and travels, I have a first hand view of the rapidly evolving forces that are reshaping the global economy, and I see the enormous growth occurring throughout the developing world. And while the U.S. has many strategic interests around the world, and much attention is rightly devoted to places like China, India and Brazil, the truth is the forces transforming Sub-Saharan Africa are of enormous strategic significance. We see in the region not only significant political developments but extraordinary economic growth and opportunity.
Of course the United States has partnered with nations across Africa for decades on a variety of issues. And while I am very proud of the important contribution our development and humanitarian assistance has made, and continues to make, in this region, I am especially excited by our evolving commercial and economic engagement with Africa. This is why I have journeyed to Africa for a second time in less than a year.
Last September, I was privileged to lead a Trade Mission of roughly 20 companies to South Africa. Most of the participating businesses were small and medium-sized firms in the clean energy sector, and we had a number of tangible successes that arose from that trip. Helping Sub-Saharan Africa address its critical energy needs has been and will continue to be a major priority and source of opportunity.
But you and I both know that commercial opportunities on the African continent go far beyond South Africa. East Africa is a region of enormous potential and promise and a place that is experiencing dramatic growth. This is why my team and I have been so enthusiastically supporting the Obama Administration’s efforts to advance a strategic trade initiative with the region, which I’ll speak of more in a moment.
Kenya is extremely well positioned to capitalize on this momentum. It holds great potential, enormous opportunity and extraordinary promise. Kenya is a critical hub for American companies in Africa, and it offers an important platform for doing business on the continent. Already more than 60 U.S. companies have major operations here including such stalwarts as General Electric and IBM, both of which have greatly expanded their presence in Kenya in recent years.
Dow Chemical, whose CEO was in Kenya just a couple of weeks ago, recently inaugurated an office in Nairobi and has publicly indicated it expects its sales in Africa to at least double within three years.
And just last evening, I participated in a reception inaugurating an new partnership between John Deere and Tata Motors of India. Global industry’s elite have taken notice of the promise the continent represents, and we are witnessing a new kind of migration in this part of the world: the migration of capital.
Importantly, Kenya is attracting not just large multinational corporations, but also an ever-increasing number of smaller-sized U.S. firms that are looking at business opportunities here as well. One good example is Geothermal Development Associates (or GDA) out of Reno, Nevada. GDA has partnered with the Kenya Electricity Company (or KenGen) on the construction of a 2.5 megawatt Geothermal Powerplant in Eburru.
I also understand that increasing numbers of Americans of Kenyan descent are returning to Kenya in pursuit of key commercial ventures. The Kenyan diaspora community is a major source of strength and opportunity for continued trade, investment and growth and is also helping to strengthen ties between our nations.
These types of encouraging developments are precisely why the Obama Administration has placed such emphasis on American trade relations with Kenya and its neighboring countries. And the numbers are beginning to bear this out.
In 2011, total trade between the United States and the five East African Community (EAC) member states was approximately $1.5 billion – a 34 percent rise from 2010. American exports to Kenya rose 23 percent during that same time, and while we have not yet reached the levels of trade that existed before the global financial crisis in 2009, we are headed in the riht direction. On the investment side, American Foreign Direct Investment (FDI) in Kenya grew a stunning 44 percent between 2009 and 2010.
Much of this trade and investment is a direct result of the benefits established under the African Growth and Opportunities Act, or AGOA, which has dramatically strengthened trade and investment ties between the United States and the region. But there is clearly more yet to do.
Momentum is clearly trending strongly in Africa’s favor, and there are extraordinary opportunities to achieve a level of growth and development that can lift millions of people out of poverty. For these and other reasons, engaging Africa is a priority not just for me and and the Department of Commerce but for the entire Obama Administration.
Today’s Conference: Public-Private Partnerships as a Key Driver of Growth and Development
But I want to be candid with you: increasing U.S. trade with Kenya and with East Africa is no easy task. Some American firms still view doing business in the region as too much of a risk. And while this view is unfortunate, it is regrettably a reality for many companies. My own view is that those companies engaged in international commerce who are not giving East Africa a serious look are taking an even larger gamble. With growth rates surpassing even the sizzling economies of the famed BRICS, it’s a market that cannot be overlooked.
In my time here thus far, I’ve witnessed firsthand the skyrocketing level of investment that has come in to Kenya from other parts of the world – from China, India, the Gulf region, and elsewhere. It’s easy to see why American exporters and investors simply must be more fully engaged. And that’s why I’m so pleased to participate in today’s conference with its focus on Public-Private Partnerships, or “PPPs.”
Without intending to repeat or summarize the many excellent presentations you’ve already heard at today’s conference, I’d like to just say that I believe PPPs are a critical mechanism for attracting greater U.S. investment and, thereby, increasing two way trade between Kenya and the United States. PPPs will play an integral role in realizing our mutual objectives and implementing the goals of the Kenyan government’s groundbreaking Vision 2030 Plan. This is because, in my view, success in bringing more investment to East Africa and pushing large-scale infrastructure projects forward will be achieved not only through innovative ideas and large capital investments, but also through the kind of collaboration that PPPs facilitate.
Indeed, for Kenya to achieve its development goals, it will undoubtedly require significant levels of collaboration across the private sector, across different governments, donor agencies, and global financial institutions. It will require effective coordination among critical partners to manage the engagement of capital, technical expertise, and know-how that different partners bring to the table.
For instance, much of the success we’ve had in getting American companies to invest in Kenya’s geothermal energy resources – the GDA example I mentioned earlier, as well as others – would not have occurred without this type of collaboration. Effectively leveraging private sector engagement through public private partnerships is also at the heart of the G8 and G20 agenda to achieve greater food security for Africa. It’s a model of enormous potential and consequence for the region.
It is my hope that today’s conference will empower all of you to identify new business opportunities, to explore different markets, conduct the necessary due diligence on promising transactions, and to locate the necessary trade and project financing in Kenya and across East Africa.
Of course PPPs are not a panacea for all things, and they can only succeed if the right conditions exist to fully leverage and take full advantage of their strengths. In this respect, the Kenyan government, along with the governments from throughout the EAC, has an important role to play in creating the necessary business climate and regulatory “ecosystem” to attract the necessary investment that drives these investments.
In this respect, it is critical that the Kenyan and other East African governments fully commit themselves to continued reforms that will improve the business climate. This includes continued efforts to create greater regulatory transparency and predictability, especially in the area of government procurement; continued improvement in critical infrastructure and logistics, and, importantly, continued attention to strengthen good governance indicators. Although it is difficult to discuss, we all know that a bona fide commitment to tackling good governance and promoting the rule of law is absolutely essential to the well being of all nations.
And of course there are a number of other important reforms that will be central to driving innovation and economic growth in Kenya and the EAC. A firm and unwavering commitment to the protection of intellectual property, which is the bedrock of the kind of innovation and entrepreneurship that is at the heart of real economic progress is essential.
With respect to all of these critical undertakings, know that the United States stands ready to continue our efforts to partner with you in these ongoing reform efforts.
Achieving the kinds of reforms that will attract greater direct investment from the United States will, I believe, pay important dividends not only for the American companies who invest here, but importantly for Kenya itself. In fact a hallmark of American investment is that U.S. companies invest not just in products but in people. From human capital development to technology transfer to the creation of the physical and other infrastructure that contributes to long-term growth and development, the benefits of American investment are distinctive and lasting, and that cannot be said of all investors, as we know well. As one government official commented to me in a different part of the world, “We seek American investment not just because of the financial benefits but, frankly, because of the values and practices that American companies instill.”
Examples of this kind of investment are already prevalent in this region. Google is offering free website development services to small and medium-sized Kenyan companies that will help unleash the creative and entrepreneurial potential of these companies. Cisco is working in partnership with U.S.A.I.D to offer education and training opportunities to those Kenyans who are hearing impaired. Coca-Cola and Dow Chemical are making major investments in affordable drinking water, which will significantly improve the health of Kenyans living in rural areas. And last August, FedEx delivered 200,000 pounds (or 91 metric tons) of food aid to Nairobi to support UNICEF’s famine relief effort in Somalia.
Just yesterday I had the chance the visit GM’s automotive assembly plant here in Nairobi. I had an exchange with the company’s Managing Director, who is in effect the country CEO, Ms. Rita Kavashe. A Kenyan, Ms. Kavashe began her career with GM in the sales division over 16 years ago. Through the training and investment GE has made in her, she has ascended the corporate ranks and is now one of just a few women CEOs of a major corporation here in Kenya. Ms. Kavashe was reflecting not only on her own growth, but also on the investment the company is making in rank and file workers on the assembly floor. She tells them that because of their superior training, these employees are highly coveted by companies throughout the region. This exemplifies well what I’m talking about.
These investments in people and acts of corporate social responsibility are not just isolated instances of companies seeking publicity. They reflect, I believe, the values of American industry and its commitment to the communities in which it operates. And these commitments are in addition to the core business investments made in human capital and talent development, in quality, and in training that leads to ethical business practices.
Advancing U.S.-East Africa Trade Relations
I want to commend the Kenyan government for its leadership in pursuing the legal and regulatory framework that will facilitate the greater use of public private partnerships as a vehicle for increasing trade and investment in Kenya. And I certainly hope that American companies will explore and take advantage of these new opportunities.
The truth is, while the United States and Kenya share a history of friendship and cooperation that spans more than half a century, there is much more that we can and should do together on matters of trade and commerce. And this is true not just of Kenya, specifically, but of the East African Community at large.
This is why in February of this year I convened a roundtable with the private sector at the Department of Commerce in Washington to discuss some of the potential vehicles at our disposal for moving trade relations forward. We had some of the largest American investors in Kenya and the EAC region in the room, as well as other leading American companies less established in the Kenyan market. Some of you here were there that day.
I have to tell you that when I put the question to the room of whether we needed to deepen our bilateral commercial engagement, the answer was an immediate and resounding “Yes.” There is widespread recognition that the United States can and must increase its trade and commercial engagement as a critical element in supporting the economic development of the region.
That’s why the Obama Administration has proposed a new trade and investment partnership between the U.S. and the East African Community. The proposal calls for the negotiation of a regional investment treaty, the creation of trade enhancing agreements in areas such as trade facilitation, and, importantly, the establishment of a new commercial dialogue that will facilitate engagement between the public and private sectors.
I’ll be visiting Arusha a few days from now to meet with the EAC’s senior leadership to discuss the benefits of this initiative greater depth. Of course, it is up to the EAC, and its member states like Kenya, to decide if they want to pursue these efforts with us. And there is still important work to do. But I believe the benefits of these regional efforts will be significant.
A regional investment treaty will create important incentives and protections that can help drive investment in the region along the lines of the projects being discussed at this conference today. The trade enhancing agreements can result in important improvements in areas such as trade facilitation and customs clearance, enabling greater trade flows throughout the region. And of course all of these efforts will enhance transparency and other good governance efforts that not only create investor confidence but will meaningfully improve the business climate.
With respect to the proposed Commercial Dialogue specifically, which will be led on the U.S. side by the Department of Commerce, let me just note that we have only three such dialogues worldwide—with Brazil, India and Indonesia. This would be the first in Sub-Saharan Africa and the first focused on a regional economic block.
Our vision for the Commercial Dialogue is that it will help to create practical ways for our governments to work together with our respective business communities to take concrete steps to improve the business climate in the region.
I would hope the Commercial Dialogue would be an accessible vehicle for the private sector to provide valuable input. During our preliminary discussions in Washington in February, you, the private sector, affirmed the need to have more dynamic trade linkages – particularly in vital sectors like energy, transportation infrastructure and information technology.
You also affirmed the need for a regional approach since rather than invest in every single African country, many American firms are more likely to identify a few select “hubs” or “platforms” and conduct regional business from there.
You also made clear that the U.S. and East African governments need to collaborate more closely on investment climate issues – on matters such as intellectual property rights enforcement, regional integration, customs and logistics, and procurement processes. You also saw a need to take a more meaningful look at matters related to governance and business ethics.
Tomorrow, here in Nairobi, we will continue that dialogue in a full day trade and investment conference, where hope to chart out a potential road map for the Commercial Dialogue so that, if and when the trade package is formally approved by the EAC, we can hit the ground running.
The Benefits of a Regional Approach to Trade and Investment
The United States sees great potential in a regional trade and investment approach for Kenya and the greater EAC. In fact, as you know well, regional integration has emerged as a central feature of global trade and investment policy and practice worldwide. From the advanced markets of the European Union to the emerging Asia Pacific markets in ASEAN and APEC, increasingly nations are realizing the significant benefits that can be realized through regional economic integration. From streamlined customs and logistics to common approaches to standards and regulatory convergence, greater coordination and harmonization in the underlying “architecture” or framework for trade and investment will ultimately benefit Kenya and its partners in the EAC.
These regional efforts also send very important signals to the investment community. As you know well, there is a fierce competition underway globally to attract capital. With white hot rates of return on investment in markets around the world, I can tell you I have seen with my own eyes the intense competition that exists among emerging economies for the kind of capital that is necessary to drive investment in infrastructure that fuels economic growth and prosperity. This type of investment is, of course, especially critical to this region if it is to achieve its growth targets and, thereby, move its people into the growing ranks of the consuming and middle class.
Regional integration can reinforce investor confidence, especially among those businesses that are already present here. A recurring pattern that I’ve observed worldwide is that American companies tend to base significant investment decisions in significant part on the experience they and their affiliates have had in market. If a company has a favorable experience, it often will scale up its operations. It might establish a presence in a second or third city, expand its supplier networks (quite often to local businesses), add new employees to the payroll or even build another factory.
And, of course, as companies succeed doing business here a virtuous cycle is reinforced, as new market entrants are drawn to the region, bringing the benefits of capital, technology and workforce development that I spoke of earlier.
Let me just say that the Department of Commerce stands ready to work with our colleagues in the Kenyan government and in the broader EAC to do all we can to help you as you undertake the important work of creating a regional market that can and will lift the African people out of poverty and into the ranks of the growing middle class. We are also ready to work proactively with the private sector to address the key market access challenges that exist and that impede trade and investment. And I hope we can count on our Kenyan and EAC colleagues to work with us as we together endeavor to facilitate the kind of trade that brings mutual benefit and opportunity to our people.
It’s clear that regional economic integration will take Kenya and its neighbors farther down the road of competitiveness and economic development than it can go alone. And while these efforts are challenging and take time, the benefits are very much worth it. As one famous African proverb suggests: “If you want to go fast, go alone; if you want to go far, go together.”
So let me conclude by affirming that I am extremely optimistic about our partnership and the great things that we can all do working together. I think the American private sector is beginning to recognize the opportunities that African nations present. I believe a growing number of companies, large and small, and from many different parts of the United States, are looking more seriously at East Africa than ever before. And our governments are working collaboratively on a range of development and trade initiatives that portend great things for Kenya and the entire region.
The Obama Administration stands ready to support U.S. companies and we look forward to working with our partners across the East African Community to shape an environment where both American and East African companies can thrive.
We are fully cognizant of the short and long-term potential represented by the resilience and talent of the Kenyan people, and we are excited about the prospect that our continued engagement offers. We are hopeful that our proposed regional trade package will be accepted by Kenya and the greater EAC, and we look forward to deepening our engagement here.
Finally, know that we stand ready to work with you, the private sector, to help facilitate and support your investment and business activities here, and I hope and trust that you will call on us—not just the terrific commercial attaches we have in our Embassies here but also the Africa experts working for and with us in Washington.
Thank you all for investing your resources and energy into this effort, and for joining me here today. I wish you a very successful remainder of your conference.
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